Online bucks December sales slump
The Global Financial Crisis may have bitten into the retail industry’s profits in December 2009 with retail sales falling 0.7% after a 1.5% rise in November and a 0.3% gain in October, however online retailers seems to have bucked this trend and had quite a successful quarter leading to Christmas if the comments from Australia’s leading online retailers are anything to go by.
October to December will become the golden quarter for online retailers in the future as this marketplace continues to evolve suggests Paul Greenberg, co-founder of Deasldirect.com.au. He said that in the future online retaillers that don’t profit in this quarter will not profit at all. “The growth year on year for DealsDirect.com.au for the October to December quarter was 30%, Although this has not just happened by itself” says Greenberg. “It has taken a massive amount of preparation in terms of inventory, staffing and systems. The last twelve months have also been focussed on broader customer retention and customer service”. Greenberg further suggests that although DealsDirect is the number one online retailer in Australia, the business is too small to affect or be affected by macro economic indicators.
Dstore.com.au experienced growth of 15% in the quarter, with strong November growth year on year just over 37%. “December growth was also up around the same percentage to the 20th” says Andrew Cooper, “but the month of December overall was only up 5%.” Andrew has mixed feelings about 2010. He acknowledges a sense of buoyancy in the economy and consumer confidence and feels there is plenty of growth potential but is concerned that small retailers are not seeing the successes and most of the growth being seen at the top end of town, which means many business owners are struggling.
According to Hal Pritchard of everten.com.au an online retailer of kitchenware, sales were up a little over 45% on last year. “The global financial crisis and Masterchef were great for business last year” says Hal. “People tend to stay home and cook more when things are econimically harder. Masterchef also created huge interest in our cookware”.
Marketing Director James Mooring of oo.com.au informed us that The December quarter exceeded expectations on every level with the electronics category the star performer. “There is no doubt that despite the underlying softness in the broader retail market online shopping continues to grow unabated. Traffic to the site had several periods in excess of 100% growth year on year.” said James. The management team at oo.com.au also pointed out their concerns in the economy for 2010 if the reserve bank has to put interest rates up, as this could affect disposable income for consumers.
Gabby Liebovich of Catch of the day was still recovering after reviewing his sales figured year on year for December 2008 compared to December 2009. ” In Dec 2008 we sold 59,848 items compared to around 147,000 items for Dec 2009. We had a sales increase of 295% and gross profit was up by 230%. its unbelievable- I am shocked myself….” said Lievbovich ” I believe that we are miles ahead of the market in terms of growth, and I am also certain that we are by far the fastest growing shopping site out there, in terms of new registrations of members per day/per week.” Liebovich further suggested that he saw no difference in trends or patterns to last year. “We sell absolutelly everything, and it all sells. the bigger the membership, the quicker you grow, the more you sell….word of mouth works like a charm” said Liebovich.
Another indicator of online buyer behaviour relating to sales was the behaviour of comparison shoppers visiting the GetPrice.com.au site. “In the First week of Nov 2008 we saw 25% traffic growth (only 11% for the same week in 2009). Where traffic dropped by 11% in 2008 in the week before Christmas this year’s traffic stayed stable for the same week. We only saw a drop in traffic for the Xmas week” said Justus Hammer, marketing manager at Shopping comparison site GetPrice.com.au. “Year on Year growth was 80% Click outs to merchants (retailers) grew by over 110% Dec 08 to Dec 09. Average order value for our clients has increased from $143 in 2008 to $160 in 2009”. As is logically expected online sales tended to peter out after the 15th of December even though some online retailers offered guaranteed next day delivery highlighting the perception that gifts purchased after 15 December may not be delivered in time for Christmas.
What about December 2010? The retail Alert group posted the following on their website :”We see the reported UK DIGITAL and on-line sales trend purported to have delivered a 20% market share for pure play on-line and bricks and mortar retailers last Christmas being followed in the Australian and New Zealand retail market place Christmas 2010.” Lets hope this forcast rings true.
Read Hitwise’s Alan Long’s analyses of trends for brandsexclusive.com.au, EziBuy and Threadless over December, click here. Note Facebook being the main driver of traffic to the Threadless website representing 65% of traffic.
Editors note: Statistics in online retailing are hard to come by in Australia, however this is going to gradually change as interest in this channel becomes an important source of direct and indirect business to retailers especially bricks and mortar retailers. These retailers with a website presence will want to measure the effectiveness of their online marketing efforts in driving traffic into their stores, what to measure and how to measure it. They will also want to know what they should be measuring!
Feel free to add your comments or feedback on your experiences this December
Photo credit:Danilo Rizzuti